5 Tips from a Serial Entrepreneur
Farid Naib, CEO and Founder of DDC, was a keynote speaker at Founder Factory a couple of weeks ago. His topic was “Ideation”, the process of taking ideas from the realm of the theoretical and turning them into a reality. Now on his seventh start-up, Farid is a genuine serial entrepreneur with multiple successful exits. Don’t let that fool you, however. The path to business achievement hasn’t always been smooth. As Farid likes to joke, “Being an entrepreneur is the best worst job I’ve ever had”. It is challenging, stretching, even infuriating at times, but above all it is thrilling. To take nothing and turn it into something produces that kind of enterprising high that keeps many entrepreneurs returning for more again and again.
Farid has learned many valuable lessons along the way, and here are his top five:
Just do it
Nike may have trademarked the slogan, but the sentiment is universally applicable. So much is never accomplished simply because the idea generators are overcome with the paralysis of inertia. There is an old Chinese proverb that says, “The best time to plant a tree was 20 years ago. The second best time is now.” Sitting around thinking about your great ideas will never produce anything. You have to act. Do some research. Build a prototype. Create a website. Network with colleagues. Start somewhere. What often holds our ideas back is fear – fear of failure and the unknown. But if you never try, you will definitely never succeed. Your tree will may not be full-grown tomorrow, but if you plant it today, it certainly has a future.
Be willing to fail and try again
The fear of failure is a powerful de-motivator, but whether your business idea is ultimately a boom or a bust, you will gain valuable insight from the journey. Farid has learned many lessons with each of his start-ups. In one early instance he learned the perils of over-promising to clients. His lighting company agreed to light three rock concerts even though they only had the equipment for two. “I tried to put together a third rig with makeshift gear, borrowing stuff from other companies, but all three shows were disastrous…It taught me not to overcommit.” Being able to pull back from a situation and assess why something went wrong is how you gain wisdom through experience. Don’t let your pride stand in the way. Be willing to admit you made a mistake and then exercise the strength to carry the difficult lesson with you so that you will avoid it next time.
The best valuation may not be the best deal
For those considering outside investment, whether angel, venture capital, or private equity, educate yourself on deal terms. Many inexperienced entrepreneurs agree to terms which are not favorable to them simply because they don’t know any better. Learn about liquidation preference – participating versus non-participating. Above all, don’t let dollar signs fool you. Just because one investor provides a higher valuation than another, doesn’t mean that they are offering you the best deal in the long run. In some cases, as Farid learned firsthand, you have to do a pre-deal calculation in order to determine how beneficial the terms actually are. Need help with that? Check out this handy cap table tool.
Growing pains are real
Once your business is rolling along, revenue is increasing, and you continue to add more employees, you will invariably begin to experience growing pains. If one thing is certain in the entrepreneurial world, change is constant. The management team that got you to $500,000 in revenue will, in all likelihood, not be the same group of people who can get you to $2 million. One of the hardest parts of growing your company is knowing when you have to pivot your team. Companies also experience phases of growth with accompanying plateaus often around $2 million and $10 million in revenue. Changing management can help overcome these plateaus as will proper planning and awareness of the potential for leveling growth.
Don’t be afraid to ask for help
In the words of Nick Cage in The Family Man, “Business is business. Wall Street, Main Street. It’s all a bunch of people getting up in the morning, trying to figure out how they’re going to send their kids to college.” Which means that even if your business is developing a fancy SaaS interface for social media widgets, the small shopkeeper in your neighborhood may have some insights that can benefit you. All businesses face the same types of issues and problems. How do I adapt to a changing marketplace? How do I get my message out and reach potential customers? How do I turn first-time clients into happy, returning clients? Practical, firsthand experience from those who have already been through it is definitely the best kind. Use your network. Talk to people who have been doing it a long time and be willing to consider that you may be wrong.
Keep the conversation going. What lessons have you learned from your business experiences?